The Exhibition Centre “Sokolniki” in Moscow is currently hosting the Jeweler-2 International Show which attracted wide participation from Russian and foreign companies mainly aimed at mass consumers. The Rough&Polished correspondent asked some of the companies how their business was going in this segment of jewelry business.
Vladimir Budnikov, SAKHAYUVELIR Jewelry Factory:
On the average, our sales went down 30% compared to their regular total. Pricy items sell much worse than before the crisis. Mainly we sell jewelry pieces worth up to 70,000 roubles. Our response to the crisis is first of all waiting till it ends hoping maybe to get some support from the government meaning longer-term credits, and of course we are trying to retain our core jewelers in their jobs.
How many people are leaving?
On their own free will – nobody. We have to resort to staff reduction. Mainly we are laying off less qualified employees and auxiliaries. Of course we are trying to preserve key jewelers and so far no one of them is quitting.
What is your forecast for a future situation on the market?
I believe even Prime-Minister Putin and President Medvedev wouldn’t risk giving it. It’s too early to say anything judging from the results of this exhibition. People and buyers are of course present here, but if compared with the last May show, there were much more of them then. Wholesale buyers are not so many – the situation is changing and big wholesalers prefer direct contacts with factories, while smaller fish – they seem to be here but it looks as if there’s no one around. There is a parallel jewelry show held at the All-Russia Exhibition Center in Moscow so there is some outflow of visitors to that place, about 30 percent for sure.
So it looks like that exhibition is a kind of competitor to Jeweler-2?
Yes, you may well say so.
Yutthapoom Srithawatchara, Pranda Group,Thailand:
As far back as two years ago we managed to foresee the market developments and worked out our own price and sale strategy in case of some crisis so now it works – the current economic situation has not so far very much affected our company’s business. In Europe and Asia we have not had any problems at all, but as for the United States – yes, the situation there is not at all bright. However, our main market is in Europe and we are working with large-scale wholesale brands and so far everything goes well.
And how is your business going in Russia?
This is what is not that clear to ourselves – this is the first time we are taking part in a Russian jewelry show and this country for us is an entirely new market. It seems as if our company attracts the Russians and people come up, ask questions and buy jewelry from us. We would be interested to have here permanent wholesale buyers and we are already working with one company and we like it, so I can say that so far we are lucky here in Russia.
What is your outlook for the market?
Well, I hope that on the whole we’ll manage to preserve our previous level of sales. This year it decreased about seven percent which is broadly speaking not so much on the general background. From my Russian colleagues I heard they were bracing for two or three hard months ahead – the crisis “hooked” Russia as well and orders from wholesalers are thinning out. We want to make a collection of jewelry especially for Russia offering it to Russian stores – may be it will help them to attract more foot traffic.
Is the Russian jewelry buyer very much different from the European or American buyer?
Russians are rather conservative in their attitude toward design preferring classic things. From this point of view you are akin to Americans. Incidentally, some collections which are selling well in the United States are briskly bought here as well.
Frat Islam, Quatris, Turkey:
The market has stalled, and there are not so many things which sell. As for Russia, I can say that everything is bad and it is almost impossible to work here now because business, as you know, is based on credits, which means a lot of problems due to the crisis. Our wholesale buyers in Russia do not want to run any risks. People, I mean retail buyers, are now short of money, so I can’t see any cloud gap ahead. Even judging by this show – last year it featured three pavilions and now only two – because by no means all the companies which took part in the last year Jeweler were able even to pay rent for their stand. During the several recent months sales in the jewelry sector slumped drastically, it’s just disaster. It seems to me that only government support may change the situation.
And how is your business going in Turkey?
It’s the same – sales are going down. However, right now we have a wedding season in Turkey and when people get married they buy many jewelry pieces and gold items. This is what helps us to survive. There is one bright side to it – crisis or no crisis, people will get married anyway. And in our country, when people get married they do not pay attention to gold prices.
Maxim Zhurikov, EPL Diamond:
Everything will be OK. The company’s business is going well and will be even better in the future. We have our own strategy to weather out the crisis and it is efficient though I’m not going to disclose it for it is commercial secret.
What kind of jewelry are people buying most of all now?
Everything. They buy gems, jewelry pieces – all the product range remains in demand.
Alexander, Valtera:
Of course, the crisis has grapnelled everyone – it may be seen even by the stands of the show participants. Previously, companies could afford two- or three-story stands but not now.
And what is your forecast for this season?
Making forecasts is an ungrateful thing. We hope things will go better.
What are people buying?
Some prefer cheaper things and some, not yet hit by the crisis, buy expensive jewelry as they used before. In my opinion, buyers do not consider jewelry as an investment instrument. Gold as such may be the case but not jewelry, for sure.
Anna Kharchenko, Russki Brilliant, a wholesale company:
The crisis has affected some of our buyers from such cities as for instance Kemerovo and Yekaterinburg where there are big factories and township-forming enterprises and where our sales fell compared with the last year. April and May have been especially hard for us. However, in those areas where small business is well developed and there are many military servicemen everything seems to be all right. We are trying to maintain the same prices as in the last year and so far so good.
What is you outlook for the next year?
Well, now many customers are in no hurry saying let’s wait and see in May but in June we’ll come and buy. Everyone is in holding mode trying to guess what’s coming next because the market stagnation in April and early May frightened everyone. Nevertheless, many customers are now opening stores – in Yugra and Petropavlovsk-Kamchatski many people are building stores planning to open them by the end of this summer. I haven’t noticed much change in Moscow, here everything remains as before.
Irina Anisimova, TIAMO, Milan:
Of course, sales dropped sharply during the several last months. But nevertheless, despite the crisis there are buyers and people come to us because they like our brand. Our company is tailored to produce wedding jewelry and wedding bands so those who are getting married order them anyway. There is only one thing which is different – if formerly we had many orders for more sophisticated and expensive models, it is certain that now the level is much lower. It is obvious that people are trying to stay within a certain amount of money not going beyond the budget they set.
What do you expect from the future season?
It’s difficult to say. Any forecasts now are just devoid of sense. Jewelry is selling well right now at this exhibition being bought by retail customers who come to us. As for wholesalers… The point is that we give our jewelry not in credit for sale but they have to buy it and now it is difficult to do, since all the system is tied to credits which some people do not take because they are wary and other people do not give for the same reason. So no one can tell you what is coming ahead.
Have prices for diamond jewelry got lower?
No, not at all. They go upwards following the dollar rate which is climbing higher and higher so diamond jewelry is not going to depreciate.
Rough&Polished, Moscow
